Friday, February 25, 2005

AP and Reuters online: how will they affect the media world?

Recent news posted by Susan Mernit on February 23 about the Associated Press adding RSS to their website has caused a minor tremor in the news industry. If news feeds are now directly available from AP, what effect will this have on the brands for which they provide content? AP has emphasized that the company is not trying to launch its own branded news site, rather that their RSS feeds will link to their members' news sites through their service called Custom News. Rafat Ali interviewed Jim Kennedy, VP/Director of Strategic Planning at AP, who added that soon, clicks on AP's RSS will be "geo-targeted," meaning that AP's RSS clicks will be directed to a member relative to the reader's location. Thus, where at first glance it would appear that AP could possibly be attempting to detach itself from its members by providing its own branded news feeds, its RSS strategy will actually result in not only reinforcing the AP brand, but also the brand of its plethora of members. In turn, this will also strengthen the relationship between AP and its members.
On the other hand, UK based Reuters seems to be taking a different route in the United States by trying to stimulate its online, mobile and interactive-television businesses.

With its internet strategy, which also includes RSS, the famed news company appears to be separating itself from its traditional role of selling its product to be published by others. Jon Friedman recently wrote an article in MarketWatch dominated by his pessimism of Reuters American venture. The article, based on an interview with Azhar Rafee, the man in charge of boosting Reuters' American digital business, says that Reuters is not taking advantage of the innovative capabilities that the web provides and that if it doesn't somehow distinguish itself, it will never attract a following in the United States, a country already teeming with trusted and established news brands. "Reuters.com will have a hard time sparking interest in American cyber-surfers. Its front page, while rich in hard-news value, appears to be pretty bland and somewhat unwieldy...Reuters.com has big goals but for now, I'd say that it has a long way to go," Friedman explained. Rafee is a bit more optimistic, noting that Reuters is used by publishers all over the world for its "unbiased voice" and that he hopes that this reputation will translate into an online business channel. When Friedman pointed out that this isn't a new marketing idea, Rafee responded that audiences are now "so fragmented" that it is "impossible" to please all readers. Part of the interview focused on Reuters competition with Dow Jones' Wall Street Journal, which Rafee sees as an enemy as well as a role model. Somewhat ironically, at the beginning of February, Gordon Crovitz, president of Dow Jones & Co.'s Electronic Publishing group, gave a speech (found on I Want Media) on "Alternative Business Models" at the fourth annual Information Industry Summit, during which he emphasized the ground-breaking opportunities that the Web provides and that online, branded content becomes "more, not less, valuable." "The Web," said Crovitz, "has broadened the business opportunities for those in the information industry who are not afraid to try new business models, even if it means going against the latest fads." During the speech, Crovitz also highlighted Factiva, a joint Dow Jones-Reuters project as well as Dow Jones' recent acquisition of MarketWatch, which also competes with Reuters in providing quality financial news. Could this mean that if AP's online business model, reinforcing its ties with its members, outplays Reuters more solo and apparently lackluster Internet venture, that Dow Jones could eventually gobble up Reuters' American branch? Will AP's online strategy prove successful? Will Reuters be able to break away from relying on selling its material to establishing its own brand in an already swamped market? Stay tuned.